Education must become a high priority, but student debt is getting in the way By the time you read this it will be less than three weeks until election day. If you’re anything like me, by now you’d rather be forced to listen to a Celine Dion CD repeatedly than hear one more politician’s speech. Which election issue are you most heartily sick of so far? One biggie that seems to be gathering momentum is that of student loans. With all the talk of New Zealand needing to develop a knowledge based economy, it’s really no surprise that the number — and amount — of student loans being taken out in this country is becoming a hot topic. So, where do we stand at the moment? Well, before the end of this year the total amount owed under the student loan scheme is expected to exceed $3 billion. Assuming no changes are made to the scheme, that figure should blossom to $5 billion by 2002. Some people don’t have much sympathy for students moaning about student loans, claiming they spend the money on overseas trips and cars etc anyway. I find these sorts of claims interesting considering how the money is handed out. For a start, students can borrow money for fees — and that money can only be used for fees. How does the government ensure that’s it’s not siphoned off into overseas trips? Well, the money is only available if you pay the fees by direct transfer to your educational institution. Students can also claim course-related costs of up to $500. Again it can’t be spent on other items, because students have to provide documentation of what they need the money for. That leaves living costs. Each fortnight students are entitled to up to $300 (less any tax entitlement to student allowances). If students don’t use the money, the entitlement is lost. It’s not a lot to go and paint the town red with. If you’re trying to pay rent and buy food I suspect there isn’t a lot left over for overseas trips. And of course from the minute you draw down your loan until the day you pay it back you’ll be paying interest — currently 7%. That interest is calculated daily. Is this really the way to encourage students to seek the higher education that most people seem to agree we should aim for? As at August 30 last year, more than 27,500 students had loans of between $20,000 and $50,000. Another 95,900 had loans of between $6000 and $20,000 and 93,750 had loans of under $6000. So, what is the government proposing to do? It has said it will introduce its planned reduction in interest rates (for students who are still studying) next year, rather than 2001 as it had planned. While this would see studying students paying just 5.7% interest, if Labour gets its way they will pay no interest at all while they’re still studying. I’ve spoken to some people who resent such a suggestion — particularly those around my age who were the first to encounter students loans. If I had a piece of chocolate for every time I heard the following argument I’d be several sizes bigger by now: "I had to pay interest on my student loan while I was studying so why should other people get away with it?" These people aren’t arguing about the fairness or otherwise of the system, just that they were dumped on — and why shouldn’t everyone else suffer the same fate. I’ve found that in such situations there’s no point talking about the greater good of New Zealand society and the need to turn out educated young people. These people can’t see past their own selfishness and I think that’s a shame for them and for this country. You don’t often (if ever) hear the reverse argument from people who went through the system when it was virtually free. Funny that. Mills is Computerworld’s careers editor and can be contacted at firstname.lastname@example.org or ph: 03-467-2869 or fax: 0-3-467 2875.
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